FINANCING THE MISSION · – above the Moody’s rated peer median * As submitted to ABOR, via Annual Operating Budget May 30, 2019 Revised Operating Budget • Adds $10.7 million

1

FINANCING THE MISSION:COVID-19 Economic Impact

Faculty Senate Meeting May 4, 2020

2

Where we were – Pre-COVID-19

Where we are – Projections

What we are doing about it

How you can help

COVID-19 Economic Impact

3

Where we were – Pre-COVID-19


STRENGTHS WEAKNESSES• Faculty & Staff• Reputation & location• Strategic Plan – Synergy/Energy• Balance Sheet• Carry forward alignment

• Limited ability to grow traditional revenue sources

• Leadership turnover• Salary competitiveness• Structural deficits in key units

OPPORTUNITIES THREATS• Growth in philanthropic resources• Growth in research activity• Growth in non-traditional

tuition revenue• Increase brand awareness

• Economic downturn ✔• Disinvestment in

public higher education ✔• Ability to attract non-resident &

international students ✔• COVID-19 🦠🦠

SWOT Analysis – All Funds Multi-Year Planning FY20

4

5

State Appropriation13%

Net Tuition & Fees30%

Grants & Contracts35%

Gifts4%

TRIF1%

Auxiliary9%

All Other8%

FY 2020 – UArizona Revenue Sources, $2.2B

6 Source: 2019 CAFR Report, page 89

Enrollment Continued to Increase

7

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Net Tuition per Student vs. State Appropriation per Student

Net Tuition per Student (whole dollars) State Appropriation per Student (whole dollars)

(In thousands)

Source: 2019 CAFR Report, page 86

Net Tuition & Fees Flatten; State Appropriation Decreases

8

Fiscal Year *Total Base Gross Tuition Revenue

Institutional Aid Net Tuition Revenues Discount Rate

**2020 (Estimated) 679,000,000 228,000,000 451,000,000 33.6%

2019 675,139,600 198,118,121 477,021,479 29.3%

2018 664,746,400 181,327,666 483,418,734 27.3%

2017 668,612,900 167,502,022 501,110,878 25.1%

2016 638,758,069 165,673,508 473,084,561 25.9%

2015 597,489,600 168,053,222 429,436,378 28.1%

2014 541,615,000 170,822,049 370,792,951 31.5%

FY20 Tuition Projection as of January 2020

Tuition Revenue Institutional Aid Net Tuition Revenue $679M - $228M = $451M

Discount Rate33.6%

*Base Revenues are Fall / Spring only & include College of Medicine MD Tuition; excludes: online, summer/winter, program fees, course, mandatory fees, and other student fees. ** 2020 Projection based on Fall 2019 data

Net Revenue from Base Tuition

9

Original Operating Budget

• Adds $37.3 million to Net Position

• Projected 159Days Cash on Hand – above the Moody’s rated peer median

*As submitted to ABOR, via Annual Operating Budget May 30, 2019

Revised Operating Budget

• Adds $10.7 million to Net Position

• Projected 135Days Cash on Hand – above the Moody’s rated peer median

*As submitted to ABOR, via Financial Status Update November 7, 2019 revised based on CAFR Report and Fall Census

FY20 Budget Original and Revised

10

Where we are – Projections


11

Base Tuition68%

Mandatory Fees7%

Summer/Winter6%

Program Fees5%

Online9%

All Other5%

FY 2020 – Net Tuition & Fee Revenue, $658M

12

UG Resident23%

UG Domestic Non-Resident

44%

UG International13%

Grad Resident6%

Grad Domestic Non-Resident

4%

Grad International4%

MD Program Tuition6%

FY 2020 – Base Net Tuition Revenue, $450M

13

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

FY19 FY20 -20% NR & Int'l -35% NR & Int'l -50% NR & Int'l

UG Resident Tuition UG Non-Resident Domestic UG International Graduate Domestic Graduate International

FY21 Projected

Traditional Student Enrollments FY21 Impacted by COVID-19

14

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

FY19 Actual FY20 Est -20% NR & Int'l -35% NR & Int'l -50% NR & Int'l

UG Resident Tuition UG Non-Resident Domestic UG International Graduate Domestic Graduate International

FY21 Projected

Base Net Tuition Revenue ($000) FY21 Impacted by COVID-19

15

Version Date - 5/3/20 Projected COVID Impacts

FY20 FY21 Total

Description (3 Mos) (12 Mos) (15 Mos) Notes

Revenue

Tuition & Fee Revenue (Net)

Enrollment projections driving Net Tuition Revenue are point in time estimates as of 4/16/20 (19 Weeks out from Fall Semester) (Projections will be updated at enrollment milestone dates)

In-State Students -$3,100,000 -$5,300,000 -$8,400,000 Tuition revenue net of institutionally-funded aid

Out of State - Domestic Students -$5,300,000 -$49,100,000 -$54,400,000 Tuition revenue net of institutionally-funded aid

Out of State - International Students -$1,900,000 -$33,100,000 -$35,000,000 Tuition revenue net of institutionally-funded aid

All Other Tuition & Fees -$2,200,000 -$4,500,000 -$6,700,000 Includes online, mandatory, distance, course, etc

Philanthropy and Investment Income -$38,000,000 -$16,800,000 -$54,800,000 Updated projections from FSO-Treasury April 27

Auxiliary Revenues: Housing, Student Union, Bookstores, Parking -$26,500,000 -$18,600,000 -$45,100,000FY20 refunds and loss of revenue due to campus closure & projections from Auxiliaries for FY21 based on enrollment estimates

Intercollegiate Athletics -$8,900,000 -$4,200,000 -$13,100,000 Updated ICA projections April 10

Facilities & Administrative Cost Recovery $0 -$16,000,000 -$16,000,000 RII projection -$4M/qtr

Departmental Sales & Service and Conferences -$11,200,000 -$2,900,000 -$14,100,000 Point in time projections net of 15% COGS savings

Estimated Revenue Impact -$97,100,000 -$150,500,000 -$247,600,000

Expenses

Costs for online support for students, faculty & staff -$6,100,000 TBD* -$6,100,000 *Re-entry working group will provide estimates by May 30

COVID Protection Measures -$1,000,000 TBD* -$1,000,000 *Re-entry working group will provide estimates by May 30

Estimated Expenses Impact -$7,100,000 $0 -$7,100,000

Total Projected COVID-19 Economic Impact -$104,200,000 -$150,500,000 -$254,700,000

*Model assumes students, faculty, staff are able to return to campus Fall 2020

Revenue and Expense Summary Projections

16

What we are doing about it


WorkforceHelena RodriguesElizabeth Cantwell

Josephine Corder

Emily Gillilan

Lisa Gundy

Francisco Pedroza

Ki Moore

Nicole Salazar

Jessica Summers

Marilyn Taylor

Staci Wilson

Intercollegiate AthleticsKathy WhismanMario Calderon

Krystal Swindlehurst

Ricardo Valerdi

Derek Van Der Merwe

Bryce Wolma

Strategic Plan InvestmentsKathy WhismanMaribel Alvarez

Melissa Colchado

Michelle Gates

Jane Hunter

Diana Liverman

John O'Neil

Andy Schulz

Marilyn Taylor

StudentsBarry BrummundRavneet Chadha

A-P Durand

Jim Florian

Greg Heileman

Melanie Hingle

Sydney Hess

Marc Miller

Garth Perry

Pam Ray

Andrea Romero

Kelly South

Kasey Urquidez

Katie Van Renterghem

New OpportunitiesSangita PawarParker Antin

Michael Brewer

Stan ParkNancy Pollock-Ellwand

Stan Reynolds

Lori Schultz

Carol Stewart

Brian Ten Eyck

Jason Wertheim

Capital Projects, Debt, & Investments

Jim FlorianLaura Bakkensen

Craig Barker

Peter Dourlein

Paulo Goes

Brooks Jeffery

Steve Kelly

Rob Miller

Bob Smith

Operational EfficienciesNicole SalazarNina Bates

Brian Berrellez

Tom Bourgeois

Steve Moore

Sabrina Helm

Sangita Pawar

Stephanie Rosenberg

Debby Shively

Simon White

Learn more at financialtaskforce.arizona.edu

Financial Sustainability Emergency Response Taskforce

Explore& Develop

Workgroups(With Stakeholder Input)

Synthesize Recommendation

Core Team

VetRecommendation

Executive Team

MakeFinal Decision

President Robbins

Core Team: Lisa Rulney, Barry Brummund, David Elmer, Jim Florian, Sangita Pawar, Helena Rodrigues, Nicole Salazar, Kathy Whisman

Executive Team: Robert Robbins, Lisa Rulney, Liesl Folks, Elizabeth Cantwell, Michael Dake, Jon Dudas, Laura Todd Johnson, Steve Moore, JP Roczniak

18

Version Date - 5/3/20 Projected COVID Impacts

FY20 FY21 Total

Description (3 Mos) (12 Mos) (15 Mos) Notes

Mitigation Strategies

Capital Planning - delay Old Chem renovation, ARB, GCRB (3 months), Postponed several renovation projects $0 $7,000,000 $7,000,000

Bond Sale originally scheduled for March 2020, Design phase only for 3 months

Postpone Annual Merit Increase Progam $0 $19,900,000 $19,900,000 Postpone to July 2021

Hiring Pause $6,700,000 TBD** $6,700,000**Hiring Pause currently scheduled through June 30, 2020

Furlough and Pay Reduction Program $6,000,000 $85,000,000 $91,000,000Total savings revised based on changes made to model 5/1/20

Strategic Plan Review - Halt new FY20 funding $22,000,000 TBD*** $22,000,000***Every strategic initiative is being reviewed - expect recommendations for FY21 by mid-May

CARES Act Funding $15,476,500 $0 $15,476,500

Institutional support from CARES Act (Also receiving $15.4M for direct aid to students which cannot be used for tuition)

Estimated Approved Mitigation Strategies Impact $50,176,500 $111,900,000 $162,076,500

Variance to Projection -$54,023,500 -$38,600,000 -$92,623,500

*Model assumes students, faculty, staff are able to return to campus Fall 2020

Mitigation Strategies

7158

69 7381

97105

139

168182

172

151

135125

109

0

20

40

60

80

100

120

140

160

180

200

Moody’s median is 154 days cash on hand. The yellow lines ( ) represent 25% +/- of this median (116 days to 193 days).

FY2020 Budget Summary Post Mitigation Strategies: Days Cash on Hand

Total Revenues and Expenditures ($000) FY12 – FY25

1,000,000

2,000,000

3,000,000

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025

Revenues Revenues - Revised Expenses Expenses - Revised

21

How you can help


How You Can Help

STAY HEALTHY!

Remain Curious, Connected, & Involved Squelch Rumors

Share Your UniqueInsights & Ideas

Support Re-entry Team

Be Gentle,with Your Colleagues

& Yourself

23

Appendix

24

Ties to Financial Status Update Revised FY20 & OFR SubmittalAOB FSU

FY20 Orig FY20 Rev % Change $ ChangeRevenuesState General Fund Appropriation 268,200 267,700 -0.1864% (500)State GF Approp - Research Infrastructure 14,250 14,250 State GF Approp - Capital Infrastructure Fund 10,763 10,763 State Fiscal Stabilization Fund (Fed. Funded)Tuition & Fees 914,100 914,100 Less Scholarship Allowance (233,800) (256,000) 9.4953% (22,200)Net Tuition and Fees 680,300 658,100 -3.2633% (22,200)

Grants & Contracts 693,900 721,900 4.0352% 28,000 Financial Aid Grants 59,000 57,900 -1.8644% (1,100)Private Gifts (operating & capital gifts) 87,000 87,000 Technology & Research Initiative Fund (TRIF) 30,400 30,400 Auxiliary Revenues, Net 225,000 209,600 -6.8444% (15,400)Other Revenue (no gifts) 152,700 166,900 9.2993% 14,200

Total Revenues 2,221,513 2,224,513 0.1350% 3,000

ExpensesSalaries & Wages 1,022,800 1,042,400 1.9163% 19,600 Benefits (Includes OPEB) 336,300 318,700 -5.2334% (17,600)All Other Operating 540,500 571,200 5.6799% 30,700 Scholarship & Fellowships, Net of Scholarship Allowance 72,200 69,000 -4.4321% (3,200)

1,971,800 2,001,300 1.4961% 29,500

Depreciation 135,500 135,500 Interest on Indebtedness 77,040 77,040

Total Expenses 2,184,340 2,213,840 1.3505% 29,500

Net increase/(decrease) 37,173 10,673 -71.2882% (26,500)

Total Education & General Expenses Increase

25

Source: 2019 CAFR Report Education and General Expenses, page 78

(In thousands)

$1,300,000

$1,400,000

$1,500,000

$1,600,000

$1,700,000

$1,800,000

$1,900,000

2014 2015 2016 2017 2018 2019

Total Education and General Expenses 2014-2019

Education & General Expense By Category

26

$25,000 $75,000

$125,000 $175,000 $225,000 $275,000 $325,000 $375,000 $425,000 $475,000 $525,000 $575,000

2014 2015 2016 2017 2018 2019

Expense Category Changes 2014-2019

Instruction ResearchPublic service Academic supportStudent services Institutional supportOperation and Maintenance of plant Scholarships and Fellowships

Source: 2014-2019 CAFR Reports, Education and General Expenses section

(In thousands)

Documents

FINANCING THE MISSION · – above the Moody’s rated peer median * As submitted to ABOR, via Annual Operating Budget May 30, 2019 Revised Operating Budget • Adds $10.7 million